Investors with a large proportion of educated female members have extra reason to take socially responsible investing seriously, but can possibly relax about poor returns. That is a fascinating finding of Rachel Pownall, an associate professor of Tilburg University, who has published groundbreaking work on the nuances of responsible investing.

Pownall, together with Arian Borgers another Tilburg University researcher, polled over 1,000 Dutch households, in order to gain their views on the topic of responsible investing and its values.

They found that close to 45 per cent of respondents were willing to give up a ‘substantial’ amount of pension income in exchange for a more responsible investing approach – a result that seems to challenge the return focus of investors the world over.

“It seems that educated females, and more females in general are more happy to prioritise responsible investing over maximum returns, no matter their own income,” Pownall says in summarising the key demographic results of her research.

While her research showed widespread support for responsible investing from pension fund members, this trend was intriguingly muddied.

Some 17.5 per cent of respondents to the survey preferred a non-responsible equity portfolio no matter the returns it delivered under a scenario as part of the survey. Pownall and Borgers believe this can be explained by poor financial understanding, but the implication seems to be that investors should strive to gauge their members’ potentially complex preferences on responsible investing.

 

Into the thick of responsible investing

Pownall had already observed before doing the research that within the somewhat fuzzy and all-embracing concept of sustainable investing there were clear opinions indicating what Dutch pension fund members expected of investors.

For instance, there has been clear pressure on Dutch pension funds to exclude investments related to the production of cluster bombs, a development “that really ignited the whole responsible investing debate in the Netherlands” says Pownall.

On the other hand, when a couple of large Dutch funds made big charity donations following the 2004 Indian Ocean tsunami, some criticism resulted of this overstepping their responsible investment mission.

These developments in the Netherlands have to some extent been mirrored elsewhere, but another key result of Pownall’s research is that social norms informing responsible investing actually seem markedly different in different societies.

“We have found that Europeans are much more driven by social issues when it comes to thinking about responsible investing and are less worried about the likes of gambling and alcohol,” explains Pownall.

This should naturally serve to steer any investors away from simply emulating a responsible investment approach of their international peers. “I think investors really need to find out what their members want when it comes to responsible investing,” she says.

Other preferences shown by the research are that smokers and drinkers are (perhaps inevitably) less concerned on the whole about their pension savings being invested in tobacco or alcohol companies. Good employee relations were meanwhile rated as the quality that the Dutch value most highly in responsible investing.

 

Responsible menu

“We also wanted to see if individuals are responsible and able enough to express their responsible investing preferences or should there be a top-down approach,” explains Pownall.

The results of some basic investing scenarios conducted as part of the survey indicated widespread misunderstanding – if not financial illiteracy – something that Pownall says is all too common when the public are tasked with hypothetical investment games.

Pownall reckons investors have a role in empowering individuals by offering responsible investing options whenever possible. She sees much more potential for that in the burgeoning defined contribution plans of the UK and US than the big benefit-promising funds of the Netherlands.

“Lots of people want to have a say in what they invest in, and a menu of investment choices would allow those how want to make these decisions to act,” argues Pownall. Large state-connected funds are probably best positioned to set a positive example in this, reckons Pownall.

Pownall feels responsible investing could also come under a wider financial education drive by governments.

A mindset shift from investors might also be needed, Pownall reckons, with the relative lack of importance that her research suggests members place on returns challenging conventional performance horizons. “It’s always a worry that pension funds could be part of the same game when it comes to the quarterly returns that investment managers obsess about, whereas there is a need to focus on the long run,” she says.

While her research shows how decisions are probably best made with the particular environment of the fund in mind, Pownall feels that the Netherlands will continue to make a hefty contribution in pushing the responsible investment debate further. Strong media attention and a questioning public are particularly vital components in the helping the country to the forefront of the responsible investing movement, she says.

 

You can read Arian Borgers and Rachel Pownall’s paper, ‘Social Norms of Pension Funds’ here

 

Norway and Britain have both announced plans to buy carbon credits, giving the United Nation’s struggling Clean Development Mechanism a boost.

 

Sovereign institutions have thrown a lifeline to the United Nation’s struggling Clean Development Mechanism, CDM, set up under the Kyoto Protocol which awards tradable carbon credits to projects like wind farms or solar power that reduce emissions.

Norway’s Ministry of Finance has just invited submissions under its plans to purchase carbon credits from struggling green energy projects threatened by low prices for the offset they generate. In another development Britain says it plans to buy £50 million worth of carbon credits.

Norway plans to purchase UN Certified Emission Reductions, CERs, up until 2020 spanning the second commitment period of the Kyoto Protocol.

Initial purchases of up to 30 million CERs will be made via specialist fund the Norwegian Carbon Procurement Facility, NorCap, set up in October by the Norwegian Ministry of Finance and the Nordic Environment Finance Corporation, NEFCO, an IFI owned by the five Nordic countries that specialises in financing environmental projects.

“We have asked for authorisation from Parliament to spend up to 2 billion Norwegian Krone up until 2020. The 2014 budget appropriation, which is yet to be confirmed by Parliament, is about 316 million Norwegian Krone,” says Sigurd Klakeg, Deputy Director General at the Ministry of Finance.

“Buying these credits is not an investment by the Ministry of Finance. It is for compliance purposes,” says Tommi Tynjala, a senior advisor in carbon finance and funds at Nefco which has assets under management of EUR 230 million.

“It is about helping Norway comply with its Kyoto requirements and helping the carbon market by purchasing from vulnerable projects.”

The carbon market has floundered on oversupply of allowances and reduced emissions eight years on from the first credit being issued. Prices for credits have crashed to less than 50 cents from over 20 euros five years ago.

Under the agreement rich country governments buy the credits to count towards their emissions-cutting targets. Companies can also buy credits to offset the effect of their activities on the climate.

But government institutions are very rarely involved in buying and selling carbon credits. Instead they use the credits to cancel out emissions back home. The financial return comes in that it is often cheaper to buy carbon credits from international projects than reduce domestic emissions.

Klakeg says that Norway’s strategy differs from other institutions weighing in to support the market in that it specifically targets the most vulnerable projects. Those that are either at a standstill or “stranded,” and projects which have no other source of revenue but from carbon prices, he says.

Although 30 billion tonnes “is quite a small amount if you compare it to the total oversupply” and “won’t have any impact on carbon prices” Norway’s purchase is very important for the projects selected, argues Tynjala.

What can other states can adopt from the pension reforms at Rhode Island.

The most significant item from the pension reform at Rhode Island is the fact the Cost of Living Allowance (COLA) is conditional. Or in other words, the fund will only pay the COLA if it can afford to do so.

This simple reform alone, is monumental in the sustainability of the plan, according to professor of finance at Columbia Business School, Andrew Ang, who has just completed a case study on the reform.

“One of the biggest things here is that the COLA is contingent. A lot of COLA’s are automatic, or linked explicitly to inflation but that is incredibly expensive for employers. I’d like that too,” he says. “At Rhode Island there is some indexation, but there’s a formula. It is contingent on investment return above a certain threshold and funding above a certain level, it makes a huge change. If they can’t afford it they won’t pay it.”

In his report, “Saving Public Pensions: Rhode Island Pension Reform”, Ang outlines that Rhode Island’s new COLA is calculated as the five year average plan investment return less 5.5 per cent. It is subject to a 4 per cent cap and a 0 per cent floor, and only applies to retiree’s first $25,000 of retirement income.

Linking the COLA to investments of the fund, and not inflation, is a significant move, Ang says, highlighting similar provisions at the Wisconsin Retirement System, whose stability is due in large part to its treatment of COLA.

In addition to changes to the COLA, the Rhode Island reform introduced a defined contribution plan which would operate alongside the smaller defined benefit plan, with contributions for all employees split between the two.

“The hybrid plan is a compromise and it’s economically reasonable,” Ang says. “It has the buy-in of the workers, they have some skin in the game and have to contribute, but at the same time the taxpayers are not bearing all the risk. It means some of the benefits of defined benefit are retained in that workers know what they’re getting, but the employer is baring most but not all of the risk.”

 

The power of facts and figures

Gina Raimondo took office as Rhode Island’s Treasurer in January 2011. She spent a lot of the first year looking at reforming the Employees’ Retirement System of Rhode Island because not only was it dangerously under-funded, the published numbers underestimated the extent of the problem. Figures, as it happened, turned out to be her friend.

In the seven years from 2003 to 2010, taxpayer contributions to the fund had risen from $129 million to $303 million and there were concerns that without pension reform that would rise to $1 billion a year within the next 10 years.

State employees were contributing 8.75 per cent of salary, teachers were contributing 9.5 per cent, and state contributions had risen from 5.6 per cent of salary in 2002 to 23 per cent in 2011. Overall 10 per cent of every state tax dollar went to fund pension benefits.

In discussing the problem with stakeholders – which included the governor’s office, taxpayers and unions – Raimondo spoke candidly and openly about these figures.

She had commissioned a report, “Truth in Numbers: The Security and Sustainability of Rhode Island’s Retirement System”, which became the songbook that all parties sang from. There were disagreements but they were based on facts and figures, not emotion and politics.

“This is her genius,” Ang says. “Everyone speaks to the same language.”

Raimondo used the facts as an important communication tool to engage with stakeholders about reform.

She travelled around the state, held in-person meetings at town halls, and spoke directly with unions.

“One thing that the Rhode Island case pointed out is that you need facts,” Ang says. “This problem can be solved by starting at a valuation basis, and everything is transparent. Also communication is really important for the government, taxpayer, workers, and unions.”

While Ang acknowledges that Rhode Island is “somewhat special”, partly because it is a small state and Raimondo was able to speak directly with taxpayers, also everyone knows each other so communication was widespread.

But he says the concept of reform, especially the contingent indexation and the hybrid plan compromise, goes well beyond that State.

 

Investment controversy

The investments of the fund, is a rather touchy subject for Rhode Island, with much criticism, and press attention of their alternative investments.

For Columbia’s Ang, the two issues have been collapsed and should be seen quite separately.

“One thing is to ensure the liabilities are paid, and the only way to do that is that the present value of the liabilities is equal to the money you have right now. Second, is the broader issue, of how you best manage the assets in a public setting.”

Ang says this latter issue is the same whether it is the Rhode Island pension fund, which at $7 billion is not that large, or a very large sovereign wealth fund.

There are a number of issues at play when there is public scrutiny, including the lack of ability to pay competitive salaries available in the commercial institutions, and that governance structures not robust because of political interference.

In addition some management and trustees at pension funds are not investment experts and “that would never happen in a commercial entity”, Ang says.

Ang considers the Rhode Island reform to be the first major public pension reform in the US that has been successful – it may not immediately but the fund in a good financial footing, but the process and reform is in place to lead to a sustainable fund.

“In the past it was piecemeal, not coherent and hacked away at the problem rather than tackling it full on, this is really a regime change,” Ang says.

“Hedge funds and private equity are appropriate in certain circumstances, but only if there is some money to manage. The second debate is about the appropriate strategy.”

Ang says the problem on the investments side is that a lot of funds are making investments without contemplating whether their own governance structure is appropriate, including whether investment decisions can be made without political interference.

“It’s discussing whether those investments are ok without the context of how decisions are made. If you do have the governance structure then alternatives may fit in,” he says. “But if there isn’t a good structure in place and decisions are being made to achieve return targets but there isn’t money in the pot to meet liabilities it’s like a paint job on a house that is falling down.”

 

 

Danish pension investor PFA is continuing a switch out of European government bonds in favor of global equities, but has begun reinvesting in Europe’s southern periphery.

DKK-350-billion ($63-billion) PFA announced a $900 million purchase of equities in April, commenting at the time that the crisis in Cyprus had increased the risk to its European bond portfolio.

Henrik Henriksen, PFA’s chief strategist, reflects that “you could say moving out of European bonds for equities been working well as typical European bond investors have lost money this year”.

Henriksen says the switch is ongoing despite some unease about high equity prices – with US equity prices increasing more than 20 per cent so far in 2013.

“You need to be prepared for some kind of reaction especially if growth news disappoints,” cautions Henriksen, adding “we also have to be aware that some of the equity value increase has been liquidity driven, and if the Fed were to withdraw that for the wrong reasons, there could be a real blow.”

“We have to see the US economy pick up next year if the upturn in equities is going to be supported.”

He argues that should a withdrawal of monetary stimulus be made to avert a bubble before underlying economic strength returns, there will be a fallout impacting high-risk assets on the whole.

Henriksen explains that PFA’s sale of European bonds has taken place across its core portfolio. At the same time, PFA has exhibited renewed faith in the continent’s periphery adding to its holdings in Spain and Italy “in order to get a better carry with a decent risk/reward”.

Henriksen agrees that PFA has a more positive view on the Euro, although he jokes this is somewhat inevitable as “last year you were wondering whether the whole thing would collapse.”

The support of European politicians and the ECB for the currency has “reduced distrust, even if you can’t really say trust has been increased” in Henriksen’s view.

PFA has extended its renewed confidence in Europe to its equity weightings – going overweight on European equities along with US shares.

The Danish fund remains neutral on Japan, with Henriksen saying “we can’t figure out yet if the third arrow is going to fly” – in a reference to Prime Minister’s Shinzo Abe’s planned structural reforms.

 

Market-based freedom

While PFA’s cornerstone guaranteed product remains bond-dominated due to its tough solvency requirements, the investor is expressing much of its enthusiasm for equities in the approximately DKK-50-billion ($9-billion) ‘market-based’ product. The rapidly growing defined-contribution offering has a near 50/50 split between bonds and equities.

Despite its clear global investment horizon, PFA’s Danish equity returns have been particular strong in recent years. Henriksen explains that one reason for this is that the fund is happy to take clear positions on companies listed on the Copenhagen exchange.

Despite underperforming relative to their benchmark this year, returns of more than 20 per cent on Danish equities have still exceeded the gains from global shares. Liquidity needs have led PFA to shift somewhat away from its traditional preference for Danish equities, however – at least in the traditional guaranteed fund.

Like many global funds, PFA is in the process of increasing its alternative-asset allocation. A recent drive started with an increase ub the share of real estate assets in the market-based portfolio from 5 to 10 per cent, with an increase also planned for the guaranteed product’s relatively smaller real estate bucket.

PFA is looking to expand its real estate exposure internationally, in order to gain added diversification. It has been exploring the London and Hamburg markets with Henriksen saying it is browsing on a “case by case” basis to avoid possible overvaluations in these core markets.

Also in the alternative space, a recent joint venture purchase of Danish energy firm’s Dong Energy’s onshore wind business for around $140 million was a headline-grabbing new private equity initiative for PFA.

Henriksen is enthusiastic on the potential of wind power, saying “the return possibilities are better than they were a few years ago. If we lever it up we should be able to get double-digit returns from this investment.”

PFA has since made a 2 per cent stake in Danish government-owned Dong. Henriksen says PFA is considering further private equity and infrastructure investments – both directly and via funds. He is confident that the associate illiquidity risk can be controlled by the fund’s selective approach and long investment horizon, allowing PFA to reap good yields from its burgeoning alternative adventures.

 

Solvency squeeze

PFA fears that its ambitions in illiquid assets could potentially be halted in their tracks by the onset of Europe’s Solvency II regulations.

The investment strategy of PFA’s guaranteed offering will “certainly be affected” by the regulations, says Henriksen, with work to set the portfolio up for the new regulatory regime ongoing.

Relatively opaque and illiquid assets like infrastructure are set to be penalised under the regulations, meaning that “infrastructure investing could be very expensive and politicians might get less from pension investors than they hoped for.”

Other asset classes should benefit though from the new European solvency formula adds Henriksen, with investment grade credit likely to look particularly appealing.

PFA’s capital adequacy ratio was as high as 224 per cent at the end of June 2013 indicating a healthy funding state.  That is no cause to relax though says Henriksen as “a thing that’s working against us is that Danes are getting older”.

PFA’s larger guaranteed portfolio suffered an investment loss of 2.2 per cent in the first half of 2013. This was largely due to rising interest rates and a loss from hedging against further interest rate drops, says Henriksen.

“The best thing we can hope for is a slow and steady climb in interest rates rather than anything too abrupt, but things have improved somewhat in the second half of 2013,” explains Henriksen.

As a large investor in socially conscious Scandinavia, it is no surprise that PFA takes its responsible investing credentials seriously.

It went further than most though in drawing up guidelines on its government bond investments in 2012.  A small number of investments in Ivory Coast sovereign bonds were sold as a result.

While efforts to increase alternative assets will remain a focus, Henriksen is happy that PFA’s investment strategy is robust – something he feels is helped by the high level of competition among Danish pension investors.

“You have to make sure your strategy is good at all times and you really have to justify expensive investments”, he says.

UK local authority schemes are under pressure to merge. It’s their turn to suggest ways in which pooling investments, or adminstriation, could achieve the economies of scale necessary for survival, but many are resisting the notion that “bigger is better” when it comes to investments.

 

The United Kingdom’s local government pension schemes have begun to publish responses to the government’s call for evidence on how to improve investment returns and deal with deficits within the sector.

The 89 separate funds in England and Wales have combined assets of £187 billion ($301 billion) but are all run individually. Pressure to consolidate the different schemes has stepped up since Lord Hutton suggested pooling funds in his review of UK public sector pension funds.

It seems that while responses from local authority schemes acknowledge the need for change most remain lukewarm on any merged, larger schemes.

The London Pension Fund Authority (LPFA) is one of the loudest supporters of structural reform.

The local authority administrator, manager of the $7.4 billion Greater London Authority (GLA) fund and also a service provider for six additional London-based funds, promotes its vision of LGPS “super pools” in its response.

“Our solution is to create super pools on a buy-in model, where local employers are responsible both for historic deficits and for holding the super pool manager to account. The super pool is responsible for asset allocation, fund management, liability management and administration,” suggests the fund.

It proposes five regional authorities, each managing assets of around $48 billion but says voluntary groupings of local funds would also work.

The $5.6 billion billion Nottinghamshire County Council Pension Fund argues that before considering the creation of regional funds, or any other form of merged fund, proper evidence should be collated to determine whether ‘bigger means better’ in terms of investment returns.

The $8 billion Lancashire Pension Fund, one of the top 10 of the local schemes, similarly “reads nothing” into a fund’s size equating to better returns.

However it notes the increasing prevalence of framework agreements and joint working amongst schemes.

Going forward this could manifest in the creation of investment management teams shared between small funds providing access to a level of in-house resources.

This would “challenge the easy nostrums sold by many of the investment consulting firms who operate as the de facto overall managers of some LGPS funds,” says Lancashire.

Sharing expertise could include pooled investment vehicles around active equity mandates and Lancashire also suggests larger funds assist smaller funds by parcelling investments into fund of funds, selling interests to smaller funds.

“This would allow the smaller funds to achieve access to a valuable form of investment that they might otherwise not be able to achieve,” suggests Lancashire.

Barriers to a single investment strategy

The $3.7 billion Surrey County Council Pension Fund also doubts a single investment strategy would work.

“For most long term, secure LGPS employers, a common investment strategy might suffice. However, within an alternative structure, there could be increasing diversity amongst employers due to outsourcing and the resultant better or worse funding levels. Well-funded employers may be able to reduce investment risk now, while poorly funded employers may not be able to reduce risk so easily.”

One investment strategy will not fit all, and a move to multi-investment strategies within one super fund will be necessary, argues the fund.

The call for evidence asked schemes how to improve investment returns.

“There is no secret formula to improving investment returns,” says Nottinghamshire.

Chasing ‘flavour of the month’ investment strategies or changing strategies every year or two will not help provide sufficient long term returns, and could increase costs.

A sensible strategy, simply executed is far better than a complex strategy involving multiple managers in multiple asset classes, argues the fund.

“The Nottinghamshire Fund’s performance has been good partly because we have not constantly switched strategies and managers. Both need time to demonstrate whether they are working, particularly as the costs involved in changing can be high.”

The role of service providers

Esoteric investments “dreamed up by asset managers and investment banks” are more likely to create unintended consequences and cause damage to long term returns. In-house investment may help to improve long term returns as there will generally be less focus on short term gains and trends, it argues.

Schemes maintain they are keeping a lid on fees. Nottinghamshire says that its own investment management costs are already low at only 0.18 per cent of net assets in 2012/13.

The fund says simpler investment strategies inevitably mean lower fees since “managers feel far less able to charge high fees”.

Trading costs may also be lower and transition costs from one strategy to another will also be lower.

Lancashire’s response is similar: “The thinking behind the call for evidence seems to be that a smaller number of larger funds will inevitably pay less and perform better. There is no evidence to support this. The Lancashire fund already pays the managers’ lowest tier of fees due to the size of mandate which it awards and its ability to negotiate favourable terms.”

How to tackle deficits

Dealing with deficits within the LGPS, up by an estimated 15 per cent in 2012, was another concern.

Nottinghamshire, which has 38,000 active members, 35,000 deferred members and 30,000 pensioner members, argues the problem lies in how the deficit is calculated.

“Focusing on one liability figure, affected hugely by the assumptions within the discount rate, is unhelpful and creates unnecessary concern within the wider public. Pension funding is not a simple issue and shouldn’t be treated as such.”

A movement of just 0.1 per cent in the discount rate changes our liabilities by over $201 million, says Nottinghamshire.

“As one of the main components of the discount rate, increasing bond yields could, at a stroke, wipe out the deficit. Across the LGPS as a whole, such movements in liabilities would far outweigh any cost savings that can be achieved through merged funds.”

Reform should focus on finding a better way to assess the financial position of funds and their ability to pay future pensions, it concludes.

Local funds were also asked what was needed to encourage more investment in infrastructure.

Once again fund’s demanded independence to set strategy themselves.

“Whether to invest in infrastructure is a decision to be made on the basis of the valuation and the return requirements of each fund. An assumption that infrastructure is good for all funds is wrong. Regeneration is not a primary role of pension funds and the risk/return profile of infrastructure investments must be considered,” says Nottinghamshire.

Consensual consolidation among local authority schemes still feels a long way off.

How could you integrate ESG into a portfolio of 7,000 stocks? Behind the Strategy Council’s report to the Norwegian Ministry of Finance on responsible investment for the Norwegian Government Pension Fund Global.

 

The Strategy Council, led by Professor Elroy Dimson from the London Business School and Cambridge Business School, has advised the Norwegian Ministry of Finance on the responsible investment strategy for the giant Norwegian Government Pension Fund Global, focusing on its strategy, issues of transparency and a more integrated approach to responsible investing.

One of the key findings is that the responsibility for managing the investment exclusions moves into Norges Bank Investment Management, which as part of the other responsibilities of asset management.

At present, the Norwegian Parliament decides what will be excluded and on what basis, and the council thinks this should remain.

However the responsibility for implementing that is done by the Council of Ethics separate to the investment management activity.

This would allow for a more integrated approach.

Rob Lake, a consultant and former director at the Principles for Responsible Investment sits on the five-member strategy council.

He says it wasn’t within the council’s mandate to look at the rules for exclusion, they are set by the Norwegian Parliament, but it looked at the process for exclusions made on the basis of those criteria and the relationship between exclusion process and engagement. The aim was to increase efficiency and effectiveness.

“NBIM does all engagement but the exclusion process is done by a separate entity – the Council of Ethics – which is not part of NBIM,” he says. “We recommend there be stronger linkage between the research by the Council of Ethics and engagement.”

He says the council tried to look at what makes sense in terms of ESG given the funds characteristics including its size, the highly diversified nature of its holdings and the fact it is very long term.

The NWPFG has more than 7,000 stock holdings, which at the end of 2012, translates to about 1.2 per cent of the world’s stocks.

“Given the fund’s size, high diversification of holdings and long-term nature, it has all the elements of a universal owner,” Lake says. “It needs to focus on issues and activities that makes sense in the long-term value of the portfolio.”

As part of that Lake says the fund needs to have a good understanding of the long term implications on the value of portfolio at the macro level, things like climate change and water scarcity (which is already one of the fund’s investment principles).

“There is a need for responsible investment to be tied to the long term issues of value creation in the portfolio,” he says.

“The conventional corporate governance agenda still clearly important and given the size of the portfolio and the significance of some of the holdings it makes sense to engage with individual companies. But there is also the more macro issues, such as market stability, and increasingly funds are putting effort into those activities.”

One of the key questions addressed by the council in this regard was getting the right balance between the focus on individual companies and the more market wide, macro, issues.

“There are parts of the portfolio where there is significant exposure to individual companies, essentially active management. So there it makes sense for the fund to understand all the factors for that company’s long-term value creation, including ESG. But that is a relatively small number of companies in a 7,000 stock portfolio, so the fund also more broadly needs to look at more market wide issues.”

But the council was not asked to give prioritisation to that, or to look at the NBIM structure or resources, it was purely a strategic objective.

However it does recommend the need for a structured and transparent process for identifying those priorities.

“Transparency is critical for the fund given its size and scrutiny. It needs the trust of the people of Norway but those needs to be met in an appropriate way,” he says. “The fund needs an integrated range of tools. To engage with individual companies and policy makers and regulators depending on the nature of the issue.”

 

The Ministry of Finance will conduct a public consultation on the recommendations and then take a formal proposal to the Parliament in the Spring. A review of active management will also form part of the Ministry of Finance’s presentation.